Just Because Your Father/Uncle/Friend/Brother-In-Law is Handy, Does Not Mean He Should Do Your Home Inspection (Part 3 of 3)

Congratulations! Your offer was accepted! At this point the first question I get from buyers is "now what?". Well aside from your lender starting your loan process, we need to arrange for your inspections. If you have been reading parts 1 and 2 of this series you have probably already decided what inspections you are going to get. Now you have the task of deciding who you will hire to do them.

Typically your agent, who likely has built a relationship with various inspectors over their career, will steer you in the right direction of who to hire. If you trust your agent you can safely assume they will refer the right service providers to you. If you are thinking of using someone else, here are some things to consider:

1. Just because your father/uncle/friend/brother-in-law is "handy" does not mean you should have them do your home inspection.

Unless they are licensed and make a living in their given field, I DO NOT reccommend doing this for two reasons: first, they are not qualified. Just because they have nicely remodeled their own home themselves or bought/sold properties before does not mean they are qualified to evaluate the condition of the property for you. Second, if they miss something BIG you have no recourse. Home inspectors generally have errors and ommissions coverage in the event of a future dispute over items found in the inspection so you as the buyer have some recourse if there is a mistake made. I understand it is a cost saving measure, but it is not worth it.

2. Hiring the right professional carries more weight when asking for repairs/concessions:

If you use an inspection or a bid from a vendor as a reason to ask the seller to pay for repairs or take money off the sales price, the seller will ask to see the reports and/or bids. A bid or report from a qualified professional (that does not have the same last name as the buyer) will be taken much more seriously by the seller because they know it is truly an unbiased opinion from an independent third party.

3. Choose the right professional for specialized inspections:

If you are having something specific looked at, such as a water heater, air conditioner or pool equipment, have the right vendor look at it. As experienced as some handymen are you should not get a bid from one to do heater and air conditioner repairs for example. If the roof needs repairs, have a qualified roofer look at it. It may cost you a little more up front, but the knowledge and expertise you will get from them in the long run will be worth it.

These considerations are especially important in a market such as ours here in Modesto where many homes are vacant and we have no contact with the previous occupant to help assess the home. Buyers are virtually going in blind, so having the most qualified people evaluate the home for you are your best bet.

Modesto's Real Estate Deal of the Week!

This week's deal is in Modesto on Ortega Avenue near Coffee and Briggsmore and Memorial Hospital. The area is close to schools and transportation routes making for a very convenient location. The home is a three bedroom, 2 bathroom and 1350 square feet on a large lot- priced at an incredible $89,900.

Why is it a good deal? This home is not only a good deal for owner occupants, it is a good deal for investors. The same model home has sold recently in the neighborhood for upwards of $120,000 so with a little sprucing up the home could be an incredible rental. As a first time buyer it is a great opportunity to enter into the housing market in a home that you can customize to your specifications over time and build equity. Since there are similar homes in the area that have sold for much more than this home buying at the low end of the neighborhood spectrum will help you build equity more quickly in this stagnant market we are in.

If you have questions about this, or any other property please contact me here, or you can visit my website and start your own customized property search.

How Do I Decide What Inspections to Get? Part 2 of a 3 Part Series

When I started in real estate in Modesto eight years ago there was no such thing as short sales and bank owned properties. There were only regular people selling their homes. Buyers got inspections, found things wrong, then insisted the sellers repair the items and the buyers were happy because their inspection expenses were offset by the repairs they received. Nowadays however with so many short sales and bank owned properties inspections have taken on a new purpose. They are, for the most part, for informational purposes only because distressed sellers will not make any repairs to a property 99% of the time. Most of the time you are looking at a vacant property with no information from the previous occupant leaving many questions unanswered. This is where a home inspector comes in handy- he can help you address some of the mystery involved.

Home inspections aren't cheap though- and when you start adding on pest, roof, chimney and pool inspections you can hit $1000 in expenses before you know it.

So which inspections should I get, if any? Well I am supposed to reiterate to you over and over again the importance of home inspections- and they are important, but they are not for everyone. Here are some examples and tips on maximizing your inspection expenses.

1. Prioritize your inspections: Decide with your agent what inspections are most important and do those first. I would suggest starting with a home inspection. Often times if there are pest related issues or roof issues the home inspector will note that he sees a potential problem and suggest you have those items looked at. You can then do those inspections on an as-needed basis. Also, if the home is newer construction it is less likely there are going to be significant deferred maintenance issues from prolonged neglect or bad repair jobs.

2. Be realistic: Are you planning an immediate top to bottom rehab of the home? If so, a home inspection will probably be a waste of your money. Homes that are in major disrepair either from neglect, vandalism or long term vacancy and obviously have major issues a home inspection is going to tell you the obvious. A better use of your money would be with a pest inspection, which would reveal structural infestation that you cannot see (see Part 1).

3. Go a la carte: If there are certain items that are of specific concern, have them looked at individually to save money. Let's say the home is in visually good physical condition overall, but the air conditioner looks questionable. Rather than pay a home inspector $350-$400 to come look at the entire property, have an HVAC contractor come and just look at the HVAC. It will likely cost you a quarter (or less) of what an entire home inspection will cost and you will get a far more qualified evaluation of the system. The same goes for plumbing or electrical issues. If something looks obviously wrong having a plumber or electrician take a look will get you a far more qualified opinion (often cheaper too).

4. When to absolutely not skimp: If you are a person who cannot (or will not) complete simple DIY projects, are on an extremely tight budget, or have little to no knowledge about the simplest home repairs, get all the inspections you can. Not everyone is this way, but we all know this person, right? The one who can't change their own light bulbs or air conditioning filter- let alone own their own set of screwdrivers? If this is you, do all the inspections you can- and it is vital you hire the right kind of people to do the inspections for you. That topic will be covered in part 3 of this series.

5. Two inspections to never skip: This will apply to only a small portion of buyers in the Modesto area. If you are buying a home with a well and/or septic system- NEVER skip those inspections. Septic system repairs (and replacement) can be extremely costly and since they cannot be looked at visually it is vital you have them inspected by a septic contractor during escrow. On a traditional sale the seller typically pays for this but on a short sale the bank may not pay for it. It is about $450 but they empty the septic tank, test it and test the leach lines. Having the well tested will ensure your well is operating properly (so you have running water).

The last, most important piece of this puzzle is your Realtor. It is important that you work with someone who has the experience and knowledge to help guide you and advise you through these issues. Many of us have years of experience not only as homeowners, but as agents overseeing major repairs to properties. I personally have seem damage and repairs of all kinds and enjoy being able to pass that knowledge and experience on to my clients. Stay tuned for part 3 of this series that will address how to choose the right inspectors for the job.

Modesto's Real Estate Deal of the Week!

This week's deal of the week in Modesto is located on Durant Street near College and Rumble behind Davis High School. Durant is a quiet street with well kept ranch style homes that were built in the 1960's. It is walking distance to schools and parks, and in close proximity to shopping and the freeway.

This home is 4 bedrooms 2.5 bathrooms and 1800 square feet. There is a separate living room and family room, hardwood floors, ceiling fans, dual pane windows, a 2 car garage, and best of all- a sparkling pool! This property is bank owned and the bank has painted the interior and put new carpet in several of the rooms. The asking price is $174,900. Additionally the seller is offering 3.5% of the sales price for the buyer to use towards closing costs.

Why is this a good deal? I feel that this home is an excellent buy not only because of the location, but because of the size and amenities of the home for the price. This home has plenty of space for a growing family, and the neighborhood has a long established track record of being a great place to raise a family. It is move-in ready and it is a home that can grow and change with you and fit your needs for a long period of time.

If you have questions regarding this or any other home for sale, please contact me HERE

What Happens When the House I Am Buying Does Not Appraise For What I Offered?

Unfortunately the inspiration for this blog post is a deal I am currently working on in Salida. The buyers chose a home with an asking price of $149,900 in VERY good condition. Because they needed their closing costs paid, they offered $154,000 with a three percent seller concession on an FHA loan.

The buyers completed their pest, roof and home inspections and the house passed with flying colors. Then the appraisal comes back- at a low $150,000.  Unfortunately this has become commonplace in Modesto and surrounding Stanislaus County. When many comparable sales are distressed they may sell for less than market value which in turn has a ripple effect on other homes in the neighborhood. 

In this scenario there are several solutions:

1. Buyer asks seller for a price reduction to the appraised value. If seller agrees, escrow proceeds as normal and the buyer pays less than they originally offered for the home. If seller does not agree, buyer may cancel the agreement. Buyer will likely retain their deposit, but will not get any money back for the appraisal fee or the inspection fees, which total almost $1000.

2. If the buyer is asking for closing costs (as in this example) the seller may agree to reduce the purchase price to the appraised value, but no longer pay closing costs leaving the buyer responsible for the extra expense. They can use their own money, receive a gift from a family member, or adjust their pricing on their loan to receive a credit from the lender to cover the fees.

This scenario has yet to fully resolve itself, but it is my hope the seller will reduce the price and pay for closing costs because that is the best option for my buyer at this point. My main goal is to ensure that every avenue  has been explored and the end result is in the best interest of my buyers.

Modesto's Real Estate Deal of the Week!

As part of a new, regular feature on my blog I am going to highlight a home for sale in Modesto or the surrounding areas that I feel are a "good deal".

This week's home is centrally located in the heart of Modesto's desirable College Area on shady Cecil Avenue between College Avenue and Tully Road. At 2000 square feet with four bedrooms and two bathrooms it is perfect for a family and priced at an incredible $180,000. The home is in overall good condition and is the perfect template for future remodel and customization.

Why is it a good deal? It is a large home that already has the basics and can be moved right into without having to undergo major repairs or a major remodel. Also, it is an extremely accessible price for many buyers that are looking to get their foot in the door in the often expensive College Area.

For more information on this or any other property please give me a call at 209-614-3303 or email me HERE

What Am I Paying For, Exactly? The Difference Between Home Inpsections, Pest Inspections and FHA Appraisals. Part 1 of a 3 Part Series

Most buyers, especially the first-timers, often need explanation regarding the difference between all these inspections everyone is telling them they need. To many they all seem the same and a little redundant, but they are in fact all different. Following is a short explanation of each highlighting their differences.

1. Home Inspection (also known as a general property inspection): This is an inspection completed by a qualified professional. Notice how I didn’t say licensed? That’s because there is no licensing/regulatory body in California for home inspectors. There are trade organizations they can choose to belong to, but essentially anyone can call themselves a ’home inspector’. Aside from all that, a home inspector will give a general inspection of the property- but not usually go on the roof. Most will go in attics and crawl spaces to look for anomalies such as leaks or other damage. They will test electrical outlets and appliances including the heater and air conditioner. They will look at the water heater and evaluate the home for general safety issues such as holes in fire walls or improper electrical wiring. They will look at sinks, toilets, showers and tubs for current or potential leakage issues. Sometimes they can give tips and pointers as to how to remedy or repair an issue and let you know realistically how severe an issue actually is. If you are my buyer I strongly encourage you to attend your home inspection. The information you receive from the inspector is valuable in understanding what he will end up putting in his report.

2. Pest Inspection (also knows as a structural pest report): The most common misconception that I hear about pest reports is that they are meant to look for rats, mice, cockroaches, spiders and other nuisances. And yes, while those are all technically “pests” that is not exactly what we are referring to. We are referring to wood destroying pests which include termites, mold, dry rot and fungus, and issues that can lead up to wood destroying pest infestation. A pest inspector will run the sinks, toilets and showers and look for leaks- as well as go into the crawlspace (if there is one) to see any stains on the sub floor from previous leaks or termites under the house. They have a long stick they take with them around the outside of the house poking at various locations (mostly in the eaves along the roof line) looking for areas of damaged wood. They DO NOT look at the roof or test appliances or look at the heater, air conditioner or electrical system.

3. FHA appraisal: The appraisal done for an FHA loan is more in-depth than a regular appraisal, but not as in-depth as a home inspection. The appraiser not only evaluates the home from a valuation standpoint but they also look at potential health and safety issues such as broken windows, missing flooring, electrical problems, missing appliances, etc. They will do a “head and shoulders” inspection of the attic looking for any obvious roof leaks or holes. Compared to a home inspection it is more of a “summary” and should not, in my opinion, be relied upon as a substitute for a home inspection.

There are more inspections that buyers can choose- but I will explore those in a future post, as well has how to choose the right people to conduct your inspections.